HL Deb 19 January 2005 vol 668 cc773-5

2.45 p.m.

Baroness Turner of Camden: moved Her Majesty's Government:

Whether they will establish a trustee task force to improve the governance of occupational pension schemes and to promote lay trustees.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Hollis of Heigham)

My Lords, the recent Pensions Act includes many changes which are designed to ensure good governance in pension schemes and which recognise the crucial role of lay trustees in managing those schemes. We have also been discussing with those organisations which currently run trustees' groups—NAPF, PMI, TUC—whether and how a standing trustees' forum could work actively further to promote and support lay trusteeship. We are considering how best to take this forward. My noble friend's Question is very apt.

Baroness Turner of Camden

My Lords, I thank my noble friend for that response. Does she not agree that it is very important that suitable people should be encouraged to come forward and take on this important function for their fellow employees? If there were a task force or something similar available for them, it would provide them with the necessary support in many instances—and possibly access to training—and give them the confidence to take on this important function.

Baroness Hollis of Heigham

My Lords, I agree entirely with my noble friend. Whether one calls it a task force or a forum, it is the case that trustees in this country are managing something like £750 billion-worth of assets. Some trustees, particularly those in the smaller schemes, have had no training at all, even though they are hungry for it. We certainly want to encourage more training. We shall be issuing through the regulator codes of guidance to ensure that the appropriate knowledge and understanding that trustees need will be exercised. If the forum is the right way to do it, I am sure we will have widespread support.

Baroness O'Cathain

My Lords, should not the training of trustees be mandatory rather than merely encouraged by the Government? The whole issue of trusteeship of pension schemes at this stage is so convoluted and difficult, even for people with financial acumen, that longer term—particularly in view of the amount of money that has been mentioned—there really ought to be some statutory obligation for proper training.

Baroness Hollis of Heigham

My Lords, there are two reasons why we have not gone down that route so far. First, you cannot predict what background people come with—some may need no training at all; others may start from a very low knowledge base. Secondly, 90 per cent of companies with more than 1,000 members already offer training. Our problem is that of those schemes with fewer than 100 members, only 30 do so. In many cases the reason, of course, is that so far they have not had member-nominated trustees. The regulator will be issuing up to a dozen codes of guidance. There will be statutory codes of guidance—on which there will be consultation and which will be laid before Parliament—which will require trustees to exhibit appropriate knowledge and understanding. I believe that is the way forward.

Lord Higgins

My Lords, as there is clearly a serious shortage of competent trustees, can the Minister confirm that, contrary to reports in the press, the Government do not propose to impose a limit of nine-year terms on existing trustees—or, indeed, on future trustees—as this would certainly deprive the schemes of those with experience and expertise?

Baroness Hollis of Heigham

My Lords, I am not aware that there is a shortage of trustees willing to come forward. They have concerns about their knowledge and understanding, and sometimes they have concerns about their liability, but, from my experience—certainly with member-nominated trustees—I know that many very able people wish to come forward. Their problem sometimes is to get the training that they want at times that are convenient to them and so on.

I am not familiar with the noble Lord's second point about a nine-year rule. I certainly have no knowledge or evidence that the Government are thinking in those terms. If I am incorrect, I shall write to the noble Lord.

Lord Oakeshott of Seagrove Bay

My Lords, beyond that, will the noble Baroness assure us that this would not be a good idea? She may know that the private sector's box-ticking approach, whereby non-executive directors are regarded as non-independent and somehow polluted after nine years, is now being abandoned. Surely she can state clearly that that would be the wrong approach for pension fund trustees.

Baroness Hollis of Heigham

My Lords, my understanding at the moment, unless the regulator issues a code of practice to the contrary, is that it is for the individual rules of the schemes to determine the terms on which trustees are elected and chosen. I have seen nothing to suggest that that will change.